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HMRC opened an enquiry into the taxpayer company’s corporation tax returns for the years ending 31 October 1999 to 2002.
They considered that deductions in the company’s trading accounts in respect of licence fees were in fact annual payments on which income tax should have been deducted and issued assessments accordingly.
HMRC also issued Regulation 80 determinations on the ground that if they were not annual payments, they were Schedule E emoluments.
The company applied for a closure notice. HMRC refused on the ground that the appeals were still outstanding and the enquiry depended on their outcome.
The Special Commissioner found that the corporation tax enquiry depended on the result of the appeals and that it was therefore reasonable for HMRC not to give closure notice while they were still to be determined.
The taxpayer’s application for closure notice was dismissed.
